>> beg your pardon? >> eight bosses. so that means that when i make a mistake, i have eight different people coming by to tell me about it. that's my only real motivation is not to be hassled. that and the fear of losing my job, but you know, bob, only makes someone work just hard enough not to get fired. good morning. welcome to "squawk box." i'm becky quick along with joe kernen, andrew ross sorkin is off today. we are on earnings watch this morning as the season gets into full swing. we're monitoring the wires. we'll bring you all of the headlines and complete analysis. today we're highlighting the best of the best. institutional investor unveiling it all america research team. first on cnbc. don't miss that coming up at 6:20 eastern time. and then we have a number of the top rank analysts joining us throughout the day. stocks bucking recent trend yesterday finishing at the highs

of the day. the dow turning in its best session in a month. this morning we'll be focusing on asset allocation. we'll find out what they're doing with more than a trillion dollars in assets. and squawk heads back to campus. this week we're welcoming money managers there five of the nation's top universities. they are single handedly responsible for finding investment returns needed to find these schools funded. yesterday we went for a little luck of the irish. today we'll be hearing from northwestern and then later this week, the university of texas, university of michigan, and stanford. plus president obama and mitt romney will be squaring off in the second presidential debate tonight. this is a town hall format. both sides say their candidate is ready. >> mitt's prepared. mitt's confident. mitt's got a good presence about him. >> i'm smiling, i'm giving a thumbs up if he can see it. i assume that he can, so i make sure that i'm always giving him that positive love.

>> john harwood will join us onset in just a few minutes with a preview. in fact he's standing right over here. first, though, let's get to the morning top stories. >> united healthcare is reporting, $1.50 a share is pretty good about that well above the estimate of 1.34. united healthcare is also forecasting full year 2012 net of 5.20 to 5.25. with that 16 cent beat in the third quarter, it should make it easier to hit those numbers even without any increase in where the fourth quarter is. the medical care ratio, consolidated care ratio, 79% in the period. third quarter revenue was 27.62 billion. not bad on the first call side. company earned -- or had 27.62

in revenue. so all in all, looks like a pretty good report for what i believe is the first report since becoming a dow component. is that true? >> yes, that is true. >> can't tell where it will open, but united health care was one that we said we would be talking about today. we'll also have goldman sachs and johnson and johnson. >> busiest day of the earnings season so far. >> so far. we have 500 companies basically to do. >> 80 of them are out, i think. >> but you know -- >> or i take 80 are this week. >> and as you know, as one of our colleagues once said, there are thousands of stocks, becky, in the s&p 500. san francisco fed president john williams says the central bank is looking for a steeper decline in the jobless rate. and stronger economic growth before it's going to stop qe-3,

qe in-if iity. williams is currently a voting fmoc member. here is today's economic agenda .at 8:30, we have the cpi. 9:15, industrial production. 10: 10:00, national association of home builder survey. and then in corporate new, yahoo! is hiring a former google executive as its new chief operating officer. decastro is marissa mayer's latest addition to yahoo! as she builds a new management team. >> i can't believe she's back. yesterday was her first day back from her pregnancy. >> i remember itll. how long did you leave me here? >> i was out for three months. actually, it was about would days high of three months. >> that's all it was? >> but she's back even faster.s. >> that's all it was? >> but she's back even faster.y. >> that's all it was? >> but she's back even faster.i.

>> that's all it was? >> but she's back even faster.g. >> that's all it was? >> but she's back even faster.h. >> that's all it was? >> but she's back even faster. . >> that's all it was? >> but she's back even faster. >> i guess i missed you so much -- >> i missed you, too. >> instead of you, i had andrew. >> we've been together a long time. >> longer than you've been with your husband, i think, right? >> yeah, actually. wow. i never thought of it that way. let's get a check on the markets. take a look at the futures. and again, yesterday the dow actually broke its trend that we've been seeing for the last three or four days. you can see dow futures are up by about 21 points. s&p and nasdaq also slightly higher. it's all coming again on a day that will be the busiest reporting day for third quarter earnings reports so far this season. in europe, you do see green arrows, as well. in germany, the dax up by 38. asia, green arrows across the board. take a look at oil prices. after some of the weird moves we've been seeing lately, right

now only down by about three cents. $91.82. do you think this is all qe-3? >> yeah. >> taking a look at the ten year note, yielding at 1.68%. hasn't moved since the moves right after qe-3. also see the dollar this morning a little weaker against the euro at 1.30 basically. it is stronger against the yen. $78.82. gold prices this morning are up by about $2.70. $1740.30. >> time for the global markets report. kelly evans is standing by with what i know will be a substantive report. what color is your -- looks good with that green, doesn't it? >> it's like an autumn rust. >> and you don't know before you come in that it's can going to be green, do you? >> no, but what i've learned is

that i should not go green or red because then i run into a problem. so taupe is a safe choice. and i knew you were going to make a comment about substance versus style. but we have seen a positive session extend to europe. stoxx 600 up by 0.4%. people are saying that's cuing off what started in the u.s. yesterday. also citigroup beating earnings. so look to goldman whether we can keep momentum there. hang seng up 0.3%. xetra dax now over the 7300 level. ftse 100 even adding half a percent this morning. this after uk inflation data fell to its lowest annual rate since 2009. spain and greece did go to market with 12 month t-bills

today paying slightly lower yields. spain's ten year is moving a little bit higher today, nevertheless 5.85%. greece, the rally continuing there. under 17.4%. italy benefiting a bit this morning. and i want to end on this note. as people sort of continue to debate whether it's qe-3 or fundamental strength in the global economy, silver yesterday got nailed. down almost 3%. today we're seeing a bit of a buns back. so in line with what we're seeing across crude, as well. but perhaps more indicative of the general risk on mood that we've seen. the debate whether or not you you want to buy precious metals versus base metals is likely to continue. but better signs coming out of the ace traustralian companies. back to you. john harwood is in studio tonight. tonight the town hall style

event will be held at hofstra university. and our chief washington correspondent john harwood will be there. but first, he's with us onset. first of all, does candy crowley -- does she know what she's allowed to do? is she going to ignore it? >> she can follow up and make sure they answer the questions. >> but they released i think -- someone got it and showed the actual document. it was h-- isn't it nice that both sides agreed on something? they agreed on how to moderate the debate. >> they agree that had they can have the lawyers write letters when they got wind of the idea that candy might interject herself in the town hall at some point because they were worried it would throw the candidates off. candy is taking the attitude i'm not just sitting there. >> why bother having a moderator. >> exactly.

>> who picks the questions from the audience? >> candy. >> that's a pretty big role right there. >> yes, but she doesn't know the questions before they ask it. >> yeah, she does. it's like when we did our town hall with obama in september 2010. people who would be in the audience submit questions. they get vetted by us. they were vetted by us. we picked the questions that we were going to ask without telling the president or anything like that. so candy has taken the questions, she's decided and has not told the campaigns which ones she's picking. she hasn't told the commission either. >> so with any debate moderator, you have to help they'll be as objective as possible. >> yes, but you've got to -- that should be less of a concern because the first questions in the first instance are all coming from members of the audience. she will follow-up, she will have a role, she'll put a stamp

on it. >> let's say that -- i won't mention any networks. but it's think of the cable universe. you have one network that shall remain nameless. and the same on the other side. if you had one of their key people prime time, would you feel comfortable with them choosing the questions? >> me so? no. >> so we're assuming cnn then is -- >> i think you want somebodies who public identity and whose professional orientation and demeanor is to try to play it down the middle. and candy fits that bill. >> hopefully she will. okay. probably not going to have glenn beck debating or -- >> no, you're not going to have keith olbermann or -- >> that was a good one. that way we got both people gone from their respective networks. >> where is keith? >> someone got mad at current

tv. they have another list of winners. anyway, what are you -- >> i'm expecting obama will be pretty aggressive. >> even though he's got to somehow pivot from the audience person on to romney. >> i keep hearing that doesn't play well in this format. >> yeah, you don't want to be too rude in the presence of voters. on the other hand, the president knows he was too passive in the debate in denver and romney was aggressive. and when you don't answering i a aggression, you have a problem. >> hard to do without moving. i saw one of the things that they can't do is get in the other person's space. >> that would be a big mistake. al gore found that out. al gore decided he was going to make george w. bush a little uncomfortable and bush actually disarmed him beautifully. he sort of looked over at gore and he goes, hi. and then he turns back.

>> bush is kind of a normal guy in a normal setting. whereas al gore -- >> exactly. that was a perfect moment to contrast the awkwardness of gore with the ease of bush person to person. >> exactly. >> and it backfired. so i wouldn't expect obama to do that. neither one of these guys has an excess of ease person to person. >> they're not allowed to go near each other. >> right. >> see that line right there? i have said keep harwood away. but he keeps touching me with his feet. no one can see that. >> but they hch- >> is that you? all right. >> by the way, what is the significance of coming back two days under three months? >> i wanted to come back before the weekend. >> i was begging her. please -- >> there will come a time when you'll regret not taking those

two days. >> no, i didn't want to start on a monday. they say you should come back on a thursday or friday so that you can get back into the rhythm before doing a full five day week. >> from what i can tell, he's a pretty big mama's boy already. you didn't need an extra two days, do we? the husband is just like dog doo-doo. >> careful, they'll cut your mike. >> that's okay. his loss. so i wouldn't expect we'll see any demented, unhinged lunatic smiling tonight, would we, where you just wonder about a person's sanity? >> that's not obama. and i thought biden undercut the effectiveness of his arguments to that extent. >> no doubt. >> and so i think -- >> i want to start doing that, when you're talking, we'll do

that in a two shot. i'll do hand signals, too. >> obama has to find the sweet spot between passive and over the top. and the one thing biden did was get democrats charged up that they were going to fight back. but obama's not going to fight back like that. so i think you can expect him to go after 47% and bain and taxes and all of the things that democrats believe separate romney from ordinary folks. and that plays to the idea of the town hall. i wouldn't be surprised if obama looks around the audience and says how many of you think of yourself as victims or that sort of thing. >> how does benghazi play with all of this with secretary of state clinton having said it was her responsibilities? >> she's trying to at that time blame for the administration. >> timing is a little odd, the night before the the next

debate. >> yeah, i don't think it's a coincidence. but i'm not sure where that issue goes exactly. obviously it was a tragedy on obama's watch. obama bears responsibility even if she goes in front of the cameras and says it's my department's problem. but i'm not sure how far -- ryan made an effort in the debate to say this is an example of the -- he's trying to create an a. massive pattern of the unraveling of the administration's foreign policy. i'm not sure you can connect the dots in that way. and convince the american people that there was some pattern of negligence. people know that that's a very dangerous part of the world. as a country we've lived through a whole lot of loss of life and casualties of various kinds. so i'm not sure how much of a game changer that ultimately is. >> you switched it from take to

bear. he hasn't taken responsibility, but he bears responsibility. >> yeah. >> but you changed it as a good journalists you are. >> because she took last night. >> she's in peru, right? she basically said no one else will take it, so, okay, i'll take it. the way that it -- >> it was purposeful. >> you saw the editorial in the journal today? >> did not. >> there's an -- >> i was watching the giants. >> they stuck susan rice in there and it's entitled hillary's responsibility. >> that's just it, this was an orchestrated -- >> we know that now. >> a series of interviews they set out to make sure that they made this point. >> they want to make sure -- how p.o.ed is hillary? like she has to take the fall for this instead of biden or,

you know, those guys didn't know anything and again it falls on hillary who is probably not that happy about the last primary four years ago. >> no. joe, let me ask you a question. what are you expecting from mitt tonight? >> my only concern is that in previous debates like in years past, we've seen -- you don't know who is coming out of the corner. remember how they can be -- is it possible to be really good one time and just be in the moment and the next time to be flat? maybe it is. i don't expect that. i think that -- >> i would be stunned if he's flat. i think he was more consistent than you're suggesting in the primary debates. >> i meant debates like when reagan was really fired up and then he came back and -- i think romney's always been good. and i still think that in that

first debate, while -- i think it was won, i don't think it was lost. i don't think obama lost. i think romney won it. >> i agree. my own perception was that, and i don't trust my own because i follow this stuff more closely than the average person, so i don't have the reaction of the average person. but i thought it was more romney being good than obama being bad. >> and i think we'll probably see more. but then again, if obama comes at him on certain uncomfortable subjects, you know, 47 -- is he going to do something with pro-life, pro-choice, going to do something with that? >> oh, you yeah, that was the one moment in the vice presidential debate when paul ryan didn't know what to say when nar said should people who believe in abortion rights be scared about a romney ryan administration. >> hollywood add campaign. >> probably another good time not to be laughing.

>> i don't think by dep laughid at that one. >> he never stopped. he was like the joker. >> you're old enough to remember the commercial -- >> we have to go. you stay and tell us this and we'll tell everybody later. when we come back, all-america research rankings.

time for your morning sports report. the giants beat the cardinals

7-1 yesterday to eastern tven t series. and in football, one of the biggest com in regular season history. peyton manning and the broncos down 24-0 at halftime. manning threw lee touchdothree passes in the second half. the broncos shocked the chargers 35-24.f towns passes in the second half. the broncos shocked the chargers 35-24.towns passes in the second half. the broncos shocked the chargers 35-24.owns passes in the second half. the broncos shocked the chargers 35-24.owns passes in the second half. the broncos shocked the chargers 35-24.fowns passes in the second half. the broncos shocked the chargers 35-24.owns passes in the second half. the broncos shocked the chargers 35-24.dfowns passes in the second half. the broncos shocked the chargers 35-24.owns passes in the second half. the broncos shocked the chargers 35-24. phil mickelson got only one shot end zone to end zone, hit 5 feet within a bull's-eye. it sailed over, but did raise $50,000 from his sponsor. it would be hard to do. distance control is his thing, but i don't know. in the affair, the stadium, i don't know, maybe with all --

>> he's use to the big crowds. >> people forget this about phil. he's doing all this left-handed. first book is an organization that provides reading material for children in need. think about that. he's always playing left-handed all the time. >> because he's left-handed. >> well, i guesses, yeah. okay. let's get to today's national forecast. reynolds wolf, good morning. >> good morning. i'm going to do the weather right-handeded. >> i'll bet you couldn't do it the other way, could you. >> i'm lucky when i can dress myself. >> are you doing the backwards thing? because there's nothing behind you, right? it's fake. >> this is just avoid is basically what it is. but we'll try writing in it. >> try left-handed. >> here we go. scattered showers in parts of new york. all that moving out. later today, plenty of dry air. 61 degrees.

73 in atlanta. sunny and dry for the southeast. lingering showers will be gone for much of the northeast. the nation's midsection, entirely different story. mostly sunny and mild for the central u.s. for the great lakes and dakotas, you'll see rain and out to the pacific northwest, we have a mammoth storm system that will bring not only rain and light snow, it will increase your winds, too. could see some gusts approaching 60 miles an hour. 89 in los angeles. 94 degrees in phoenix and 72 in salt lake city. but in terms of your travel weather, it will be dicey in parts of the big sky country. and going left-handed, what you can expect in terms of your air travel, possible delays in chicago and seattle, but no delays at the hubs in l.a., atlanta or even d.c. there you go, you're up to speed both hands. >> way to fgo, reynolds.

>> like fifphil connors from grd hog day. coming up, the most accuracy analysis and analysts on wall street, institutional investors unveils its rankings of the best of the best next. and don't forget, the boss today. it's national boss day observed every year on october 16th. the time when workers show extra appreciation to their employers. observance kacreated back in 19 to kiss up to bosses back then for better relations between bosses and their employees. and i decided since all the immediate bosses, all they're doing is kissing up to the next boss basically from what i've seen, i'm going to go right to the top boss. >> oh, no, my friend, you are the caboose. start kissing. >> you have to go serially? i have ten piece's asses to kiss. p. >> you can't say that. >> i can't? all right. never mind. at optionsxpress we're all about options trading.

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good morning and welcome back to "squawk box." i'm joe kernen along with becky quick. andrew ross sorkin is on assignment. institutional investor is unveiling its all america research ranni irannin rankings. joining us is michael pelts. what goes into deciding who's best in a particular sector?

>> we go out to the people who know, and that's the buy side firms that use the research. >> so in the past, we've pointed out all an analyst can really do, as much home work and as much channel checking and leg work as you possibly can, give if your best shot, but that isn't guarantee you'll be right on whether the stock goes up or down. is that the way you to it, can an analyst be really good but wrong about the direction or price target of a stock? >> we find that the most important thing is not stock picking. we went out to 950 firms to find out which analysts across 600 different sectors and industries were the best. and basically the things that they look for are thins like industry knowledge, accessibility -- >> so access to pick up the phone.

>> for sure. so stock picking is one of the lowest things on the list. >> kind of scary. >> if you're an investor, your stock picks are your own. you're not going out to analysts to tell you what stocks to buy or sell. so one of the things that we did this year that was fascinating is we went out and asked the buy side firms which analysts were best when it came to corporate access, providing access to the management of the companies that they cover. and that really has become critical over the last four or five years. >> don't you have to be nice to the management and not say that you'd sell the stock in order to get access to them? >> you tonight necessadon't neco be nice. you need to be fair to the management. >> people who are nice tend get better access. >> they could. certainly the analysts that are

going out there slamming companies are going to have a hard time getting access. but access is critical for investors. that's one of the things that we found, jpmorgan which led the rankings this year did particularly well when it came to providing corporate access for its investors. >> i think of mike mayo or something and how he set out -- he was closed out of citigroup meetings. at least he gets push back from certain banking institutions that he would write negatively about. so he can be great, but probably wouldn't be in the top three. >> well, he can still do well. he wouldn't necessarily do well in terms of providing corporate access. corporate access is just one of many things that investors are looking for from their analysts. >> i guess investors aren't necessarily taking the, i don't know, the --

>> they're make their own decisions. >> in their systems like one, two, three, i remember there were like four things that they would measure near term, long term, whether it outperforms the segment, how safe the dividend was, all that. you don't look back to see if they're dead wrong on everything. >> no, for what we do, we're in the doing that at all, we're not analyzing the quality of the stock opinions. >> so it means nothing? >> it does mean something. it means analysts, their industry knowledge, their expert tease, the relationship they have with companies, those do matter. and so as a result, you would

expect that serb the eacertainl earnings estimates, they're numbers when it comes to looking at potential revenue, profits, those numbers are likely to be pretty good. so the analysts make our team every year, their stock picks in fact be a little bit better than ours. >> michael, thank you. appreciate it. i understand how it works. guys can get lucky. a dart board guy a lot of types does better. but if you know the companies inside and out -- >> sometimes a 12 month running average is -- >> usually born out over a long period. if you're investing quarter to quarter, it's crazy anyway. thank you. if you have any comments or yeses, squawk@cnbc.com. when we come back, the inside line on intel ahead of its earnings report tonight. and then one of the top rated analysts, a member of institutional investors

all-america research team. we'll welcome sanjay sakhrani and ask him for his top stock picks right now. sglec plus a parade of quarterly results still to come. coke, johnson & johnson are just a few. and squawk heads back to campus. we're welcoming money managers from five of the top five universities. they are single handedly responsible for finding investment returns needed to keep these schools funded. yesterday we had a little luck of the irish. today northwestern. later this week, we still have the university of texas, university of michigan, and stanford. let's -- let's start over from the beginning. we were just driving along, comin' back from the lake, and all of a sudden, ka-plam. it blindsided us. what is it? our college savings account. how do you think it happened? not sure. i think something we bought a while ago turned out to be something else, annnnnd, i remember a lot of other stuff in there had the word "aggressive" in it. is everyone okay?

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intel reporting after the bell today. joining us on set for a preview is craiggchberger. what are you looking for? >> they've already pre-announced, but it will still be pretty weak as they report third quarter and guide to the fourth quarter. pc demand is as bad as it's ever been. there was no sequential growth in the third quarter which is the first time it's ever happened. year over year shipments are down. so seeing weak demand from smart phones and tablets and i'm not sure there's any quick fix. >> or any eventual fix. pcs will never be the powerhouses that they were. >> i think that's the case. unfortunately, intel's probably plan for 10% unit growth,

building capacity and manufacturing plants. so the company's probably going to see gross margin pressures. and apart from the fact that the economy is just so horribly weak, if you're not selling to aem or to a lesser extent samsung, then you're probably in the weak bucket. >> can they ever change that just by eventually making inroads with samsung or somebody? >> intel hasn't done that well in mobile. they've gone halfway, but not all the way. so one of the companies that i like that is the new intel in mobile is qualcomm. qualcomm sells to apple, to samsung. and so if you want to participate in grow, qualcomm is a great name to own. broad com is a great name to own. >> enterprise computing won't move to tablets. >> server stuff is an area of strength for intel. so -- >> not going to change five

years from now. >> you'll still have servers. i don't think intel is going away. but certainly top line growth will be hard for them to get. and as we saw, the stock just topped out at $29 -- >> always going to need chips, though. >> absolutely. and hard line phone service. >> what will my tablet do in five years that will make me so excited? >> probably pretty much everything that your pc does today with smaller and a lot more battery life. >> is it going to freeze up? i could never go back to a pc. i have a mac now. >> i'm thinking of ordering a pc just -- >> microsoft days? >> yeah, i want an apple desktop, too, but i want another -- i don't know. just because it's stuffy know. >> do you have a mac know? >> i have an ipad. >> you should never get another -- >> this is the argument in our house. >> i know nothing and i didn't

have to learn anything on a mac. right? >> that's true. >> it's just all works and it never sits there with the thing going around and around. >> well, if you go to the schools these days, the kids are on ipads, they're not on pcs as much. it's hard for me to create content on an e pad today, but i would guess in a couple year, those functionalities will be much improved. >> my daughter's homework, everything that you do, all the assignments are on an ipad. everything's done -- >> does that mean you would not such shares of intel? >> it has a 4% definite deniiff yield, so the value people like the stock. but it's probablyvend yield, so the value people like the stock. but it's probably going to head back towards 19 or 20. the one thing i would say is the chip demand is really awful and the rest of the world is rallying on qe-3 goodness. but outside of the apple

supplier, all of the chip guys are hurting. it's a horribly weak demand environment. so a real disconnect between the chips versus what the rest of the market is doing and i think it's important to watch that and be a little nervous about that. >> and you like qualcomm and broad com. >> you know, that's where you hide out in safety right now. if you want to be safe, you got to be with the apple-levered suppliers because the rest of global demand is so weak. >> thank you very much. great talking to you. >> thank you. just a few minutes ago, we unveiled the all-america research team p. joining us is one of the top analysts who is featured on the cover of that. sanjay sakhrani is senior analyst and majoring director. and sanjay, thank you for joining us this morning. >> no problem. >> why don't we talk about first of all a little bit about your coverage area. you are looking at companies like capital one, alliance data systems, ebay, this is all in the consumer finance area?

>> yeah, my coverage universe is a bit unique. i cover both financial names and i.t. names. on the financial side, i cover card issuing companies. and on the technology side, i cover card networks like visa, mastercard and ebay. so a very unique coverage base. >> in general what you can tell us about the consumer from those stocks that you cover? >> what's unique as well is what you're seeing in card land is very different from what you've seen in the broader economy. and that's because over the last couple years, a lot of the adverse election or consumers with lower credit have basically been flushed out of the system. so what you're left with is a very positively selective group of individuals. so you're seeing credit losses at the lowest levels they've ever been and that's in a very high unemployment situation. and then also on spending volumes, those are tracking ahead of kind of what you're seeing in the broader economy

from consumer spending and retail sales. >> that's kind of a positive spin on saying consumers just can't get credit right now? >> i think gradually it's coming. definitely if you look at some of the companies that i follow, they're more inclined to extend credit today because they're in good capital positions. i think the rules of the game are more defined. so we're starting to see a little bit more credit extension and i think that's one of the positive points of some of the names i cover. >> but does that worry that you some of the credit losses will also go up and have we gotten through the worst times of the consumer downturn? >> i think you could see modest deterioration. underwriting standards are relatively robust. but you do get revenue growth which i think is something investors is looking for. >> your best performing stock pick was capital one which is up about 37.5%. that is still one of your top picks? >> that's right. it's our top pick. they've made two acquisitions.

ing correct and hsbc's card portfolio. we think that there is a lot of up side to the stock. there's a lot of accounting related noise. and i think as the story is better understood, the stock should do well. it trades at eight times our forward number. and if you look at comparable bank, they trade at 10 to 12 times. and we think similar multiples are wasrranted. >> how does ebay fit in, is that pay pal? >> that's right. pay pal will become 50% of their business. that call has worked out pretty well. we think there's more room for ebay to agree and there's a thee theme of convergence and ebay epitomizes that story.

>> sanjay, thanks very much for your time today. >> thank you. and becky and i are l. hewi over to the chairs and the stories catching our attention. and then the firm manages more than a trillion dollars in asse assets. so what can the rest of us learn the from black rock. we'll ask the investment team. tomorrow, rating tonight's debate. whether another strong performance from mitt romney give him the edge or will the president come out swinging? we'll continue our squawk endowment series with a portfolio manager 1307b8 frespo for funding the university of texas. plus earnings reports from bank of america and pepsi. don't miss "squawk box" starting tomorrow at 6:00 a.m. eastern. nr instinct duff & phelps finds the sweet spot

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i had some backup on what i wanted to talk about yesterday because we killed the chairs so i didn't have anything i wanted to talk about today. can i talk about what i wanted to talk about yesterday? >> you may. >> you did not see a picture of the painting that was sold. >> no, you told me about it but i didn't see a picture. >> it's interesting on a lot of different levels. it was a record price for a

living artist. this guy is alive. >> okay. >> german artist richter, gerhard richter. what iity that was interesting, i think we have a shot of it, you can't really see it very good, i like it more than rothko's. it's an abstract. >> i liked rothko's better. >> it loo it looks like a weather map, the storm's coming in. >> you know who sold it $34 million. eric clapton bought it a little over ten years ago for 1/10, so he put $2 million into it, elick clapton, "slow hand" just sold that piece of art for $34 million. >> yesterday when you said it's out there, i said it's going to be better than the rothko. it looks like -- >> it would not do it justice. >> it looks like sherbet.

i like rothko better. >> rothko is ridiculous, red up here and a line. >> it looks friendly. if i had to pick one to hang in my living room i'd pick rothko. >> if you put ten of them in a row and made some of them total crap that kids did and asked me to pick, i'd have to pick like six of them before i get to the one -- >> is that the art or the eye of the beholder there? i'm with you. i'm arguing from this ridiculous position. i'm actually with you. i wish they could make them pay me money for that, too. the story in "usa today," did you see the ads for pizza hut, offering free pizza for life to anybody who would stand up in the town hall and actually, i get this crook ed that way, anybody who would stand up in

the town hall and ask the question, use their question to, pizza or pepperoni or sausage on your pizza. pizza hut is admitting they have pizza on their face, they'll pull that campaign, they're not offering that anymore but one thing you can say for them is at least they got a lot of free publicity over it. >> owns yum brands. >> yes. >> novak, he doesn't usually -- >> the thing was interesting the pr stunts gone awry, bmw had to apologize after they offered to let somebody name a storm system that was coming through. it turned into this big chill and killed a lot of people so that was a bad move. >> did you see the one where they're selling a car where you put, you get to a certain amount of air in the tires the horn

goes off. they have this guy in his normal life and getting a job interview and gets the job so he starts shaking the guy's hand and starts doing all of the weird shakes taken goes boop, and stops. but he's gone too far. then he's betting money and at a black jack table puts the whole thing and the horn goes over and he pulls it back. he kisses a girl good night once and they focus on his face and he gets his tongue all ready, and the horn goes off. it's like don't make me think of that! this car company, you haven't seen this in. >> no, bleh. >> he's getting ready for a big disgusting -- >> it's a reason it's called a french kiss. coming up, he's just finished a 34-day tour of the country, david walker, we'll tell you how he is steering more than a tour bus away from the

fiscal cliff and blackrock's dudu du dual, the perfect balance, right here on "squawk." plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.

rising above politics. >> for generations we've asked our politicians to bring home the bacon, the pig is dead. >> david walker on how to avoid the fiscal cliff and steer america back on track. >> jeffrey rosenberg and bob doll of blackrock here on seizing the opportunities that could make you profits. plus donald trump talks business, real estate and more as the second hour of "squawk box" begins right now.

good morning and welcome back to "squawk box" on cnbc. i'm joe kernen along with becky quick. andrew is off today. in the green room getting ready for his guest host appearance, taxes ranger, david walker of the comeback america initiative, 10 million a minute bus tour. that's how much we're blowing every minute. at 7:30 eastern, blackrock's quarterly asset allocation a first on cnbc interview that you cannot afford to miss, find out where the nation's largest money managers are putting their money at this point, and then it's tuesday, which means it's time for trump, donald will be joining us at 7:40 eastern. let's go to becky now. i don't know where else i could go. it's just the two of us. is coke out?

>> not out. we are waiting on coke. you wait when i read this. >> i'm looking at it here. >> take a look at the futures this morning, yesterday we did see a turn in the markets where you actually saw a gain which was a surprise after several days of losses. the dow futures are up 37 above fair value and in some of our other headlines the newest dow component unitedhealth group earning 16 cents better than expected and raised its full year forecast citing strength across its business units. this is going to be busiest day for third quarter earnings to date for this quarter. yahoo! chief executive marisa meyer is back from maternity leave and named enrique decastro as chief operating officer. and amazon.com is going to be hiring 50,000 seasonal workers for its order fulfillment

centers. i'm sick. i can't say it today. amazon expects thousands of the workers to stay full time when the holiday season ends and the futures are indicated a little higher this morning. >> got a flu shot? >> i did. it's not that, though, i got a cold. >> greco got a flu shot -- >> it's just a cold. i'll watch for coke. fi >> fine, keep your distance. rio tinto, the world's number two iron ore miner says its operations are running strong despite china's unexpected outlook. bankrate is warning its earnings will fall well short of expectations. it blames declining insurance referrals and the shares are down sharply in afterhours trading and watson pharmaceutical won u.s. anti-trust approval to buy a swiss drugmaker called peer

actavis. watson is one of the world's biggest supplier of generics, the transaction expected to close in late october, early november and starbucks will sell the coffee chain's new varismo brewer that you can buy, it is like the keurig things. shares of green mountain stumbled and starbucks announced plans to launch in march. green mountain's keurig single cup coffee machines control more than three-quarters this weekend. >> i bought another one this weekend? >> what do you mean another one? >> we have a couple of them. i like them. i'm addicted. >> you're a collector? >> i've broken them. >> all right, time for an update on the overseas markets.

ross westgate is going to join us from london. hi ross. >> where were you yesterday? >> where was he earlier today? >> yesterday he was at spy camp or something kelly said. >> oh, that's right, yeah, that's right. >> got something coming up for the next bond movie. >> you could tell us about that but you'd have to kill us. >> basically, yeah, but i am allowed, i will have some clearance to report more around the launch of the new bond movie the end of next week. >> all right, just don't give any of the real details that could put people in harm's way. that's what you got to be afraid of. >> we don't do that. >> can you talk at all about financial markets? >> i'm cleared to do that, whether i'm capable is the question. this is where we stand. as we go toward the u.s. open today ftse at the best of the

session. xetra dax is slightly firmer, banks doing up fairly well, and bnp and banco santander, up, despite the two banks are put on a negative outlook it will put a wider view on spain in november. they haven't flinched this morning. the sector that is underperforming today is european autos, all down. fiat, renault, peugeot, new carmakers down for the 12th consecutive month in september. registrations down 49% in greece, 37% in spain compared to last year. bmw is bucking the trend with a 4.1% rise. we also had an auction out of spain, didn't go too badly in terms of a t bill auction. they raised more moneyen this

they wanted $had4.86 billion ane have a bigger test thursday they'll raise about $4.5 billion in threes, fours and tens, the first spanish debt auction since the s&p move last week to which we have not had a lot of reaction. the bigger test with moody's if they put spain to subinvestment grade that could happen in the next two to three weeks. data out of the uk, inflation numbers came up as expected the annual rate tipping down to the lowest point since november 2009. the annual rate 2.2%. it's expected to plateau. sterling unmoved by that number, there is still an expectation that we could get more quantitative easing in the november bank of england meeting which is a couple of weeks away but it might be a bit of a finer edge as far as that is concerned. tomorrow we'll get minutes from the last meeting and more on the employment report as well. as we head toward the u.s. open

we have banks doing pretty well, resource stocks doing very well. autos on the weaker side. i'll hand it back to you becky and joe. >> ross, thank you, just what we need more quantitative easing. we'll pay attention for that and wait for your bond update. when we come back we're talking taxes ranger, david walker will be walking the edge of the fiscal cliff and tell us if we are headed for an economic disaster. good morning, david. and a first on cnbc interview, bob doll and jeff rosenberg of blackrock tell us where they are putting their money to work. "squawk" is back in two minutes. comments? questions? send them to @squawkcnbc on twitter. follow the show and look for updates from andrew, becky, joe and the "squawk" staff. "squawk box" on cnbc and on twitter americans are always ready to work hard for a better future.

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. how real is the threat of going over the fiscal cliff? joining us is david walker, founder and ceo of the comeback america initiative. the last five weeks he's been on a bus tour talking to americans about issues affecting business and their y. it was called a $10 million a minute tour.

david, it's great to see you. thanks for coming in. i want to start by pointing out what i have heard this a lot recently and that is that the american public doesn't follow what congress does. the american public leads and congress eventually follows. you look at almost any of the watershed events whether it's civil rights or gay marriage to some extent you see it happen in the public first and later the politicians seem to catch up with it. anyone who thinks it doesn't matter is at their own peril. >> washington is a lag indicator. top line we found out 7% believes our fiscal challenge should be a top priority for the presidential candidates as well as other candidates for office and only 8% have confidence in

their ability to get something done in 2013. 85% believe it's a combination of spending reductions and additional revenues to get the job done. we talked about reforms in eight different areas, social insurance, tax, budget controls, political reforms. the minimum support we got for the reforms was 77%. the grand bargain got 92% support. >> which people are we talking about? >> two representative groups of voters in northern ohio and northern virginia where we actually contracted with a group calls america speaks who specializes in citizen education engagement to recruit a demographically representative group of voters who gave up four hours on a saturday and came with us, alice rivlin did one with me in northern virginia,

belle sawhill in ohio, we got unbelievable response. it's not just the fiscal cliff. it's the fiscal abyss. we have to address both in an integrated fashion and we need to do it. >> the fiscal cliff, we're now talking back to the abyss. we probably don't have time to do a massive restructuring and tax reform, and we have to deal with that and om stop gap way. >> we need to make sure the economy, jobs and fiscal responsibility are the top priority, they're all important, they're all interrelated, they will determine our future.

tonight we need more specifics with regard to taxes, with regard to health care, with regard to defense than we're getting. we need make sure in the lame duck session we avoid the fiscal cliff but realistically we're going to defer a lot of the big stuff probably for about nine months or so to set up a grand bargain because you can't do comprehensive tax reforms, social insurance reforms, you can't make the decisions about how much to cut defense and other spending in a lame duck session. you need some time to do it, but it's possible to do it. >> i've been thinking about this as i see companies and states move away from defined benefit to defined contribution. it's just a seed change in the way we view in what anyone's able to provide for people in the future.

but do we need someday to say health care needs to be a defined contribution, taking care of our people needs to be a defined contribution, not a defined benefit? if you call it voucherization or you try to demagogue it some way or another, is it an absolute necessity that that's the only way out of this mess? >> it's not the only way out but we have to have a budget for what we spend on public resources for health care. we're the only major industrialized nation that doesn't have a budget. >> we strip the benefits to something that's a basic plan? >> there are several ways. first one of the things we tested in health care reform is universal coverage for basic and essential that's affordable and sustainable, preventative, wellness, catastrophic protection, delivered through choice and competition, with a budget, paying more based on evidence. >> air bonds. >> catastrophic. >> compared to what government

normally does, yeah, but government's always going to do more for the poor. government's always going to do more for the disabled. government's always going to do more for veterans. let's understand that, but what we have to do is recognize what is appropriate, affordable and sustainable for the vast majority. we also tested moving more towards means testing of premium support for medicare's voluntary programs. lot of people don't realize that 95% of people who voluntarily sign up for the two medicare voluntary programs, physician and outpatient, and prescription drugs, get a 75% tax subsidy irrespective of income and wealth. government hasn't learned the difference between universal opportunity and universal subsidy. government has gone from 2% of the u.s. economy in 1912 to 24% today, headed to 37% by 2040. >> all of the programs start out

supplemental and it's all you have. it's not supposed to be that way. why can't believe understand do ads much as you can and then we'll help you. some personal responsibility? >> we have strayed from the principles and values that made this country great, and we're going to have to get back to them. we need a solvent system -- >> food systems are supposed to be a supplemental program, food stamps and they are the program for many people at this point and it would be much better to have people providing the dignity that comes with working is a lot better than the dignity that comes from cashing those. >> we did talk about six principles that got 92% support. we need to have a pro-growth reform. we need to have social equity. it has to be culturally acceptable. it's got to pass a math test. it's got to be politically feasible, and we need to have meaningful bipartisan support. i can go into details but that got 92%. >> i just heard six things that will never happen though. >> they can. let me tell you what it's going

to take. it's going to take extraordinary presidential leadership that we haven't had in a number of years. we only have one chief executive officer in the united states, that's the president of the united states. the president has the ability to command time from all the networks and all the other outlets on request. the president has to use the bully pulpit, whoever the president is, to make this case to the american people and then the people have to put pressure on senators and members of the house to work with the president to use this ticking bomb. >> that's a pretty tall order. >> it can happen and we need political reforms, too. we need redistricting reform, integrated and open primaries, we need campaign finance reform, we need lobbying reform, we need term limits. >> the american public is unhappy with the way things are going but they have very solid ideas about what they would like to see done. you've been doing this for a

long time. is it back to 2007? i want to say it was before the financial crisis hit. >> 2005 is when i, pardon me, 2003 is when i blew the whistle that washington was out of touch and out of control. 2005 is when i started going on the road. >> so what have you seen? >> the deficit started exploding. i'm not saying it's your fault. but you started this and it got ten times worse! i'd stop. >> in 2003 -- >> it's not your fault though, it just happened at the same time. >> in 2002, sorry, the end of 2002 the statutory budget controls expired and things have been out of control ever since. >> that's the problem. it wasn't your fault. >> you have seen a real change. you used to talk about how you needed to educate the public. >> the public is way ahead of the politicians and frankly, washington is getting the message now, too. the business community is now starting to get engaged through the fix the debt campaign. i'm on the board of the committee for responsible federal budget, they're running that and so we have a lot more

players on the field, even ross perot is getting reengaged. i did a joint interview with ross perot for "usa today" and c-span when we were down in dallas, and keep in mind why he ran. he ran on fiscal irresponsibility, political dysfunctionality, declining trust in government, declining confidence in the future and fair trade as well as free trade. guess what? we're much worse off on all of those today than we were 20 years ago and we're losing ground fast. >> he wasn't going to endorse anybody. finally endorsed romney this morning. >> endorsed romney in "the des moines register." why he did that there. >> swing state. >> caucus state. >> i'm thinking about this debate tonight and i don't know if you're going to see what you want to see tonight. i think they're going back to prior tax returns, the 47%,

they're going to do all that stuff. >> i think governor romney needs to be prepared to answer a few very simple questions. for example, name three tax expenditures, tax preferences, tax loop holes you'd either eliminate or scale back on. he needs to be able to answer that question in order to provide credibility to his tax reform plan. now it is possible to do what he says he wants to do, because we have $1.1 trillion a year in tax expenditures, so you have to close somewhat less than half of them in order to make the numbers work. that's without additional growth. >> you do understand that to give real details before you're in office is difficult, and they got to be negotiated afterwards. we have a health care bill we decided to read after it was passed to see what was in it. we could at least get elected before -- >> but joe that's exactly what we don't want to do.

z>> without affecting the middl class, that's the argument. >> i pay alternative minimum tax. >> ten seconds. >> i don't get the deductions. i get interest on a primary mortgage and charitable contributions. that's it. >> david will be with us for the rest of the program so we'll talk more about this. when we come back, making money now. a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety. which can withstand over three and a half tons. when you take a closer look... ...at the best schools in the world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students.

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welcome back to "squawk box" everyone. in our headlines this morning, we are just an hour away from the government's latest inflation report. economists are looking for 0.5% rise in september with the core rate of 0.2%. once these numbers are in the books the government will announce next year's social security cost of living increase, that is expected to be in the range of 1% to 2%. major shareholders on state street are seeking the ouster of

chief executive jay houly. four of the ten are unhappy with his performance. the paper says the shareholders are frustrated with the stock price and cost cutting efforts. mattel earning $1.04 for the third quarter, five cents better than expected, revenue beating consensus with profit margins widening. it benefited from its fisher price and american girl product lines. joe we have numbers out from coca-cola? >> i do, 51 cents was the non-gaap number, in line with expectations at 51 cents. the $12.34 billion in revenue was up from last year's $12.25 billion but the number on the screen is $12.41. so just slightly below that. north america, unit case volume was up 2%, and that is above the estimate of 1.1%.

latin america was up 5%, and that is above the estimate of 4.1%. international case volume up 5%. i don't have the estimate for that. >> worldwide up 3.8%. >> worldwide the estimate was -- >> sorry, the international. >> estimate was 3.8 for worldwide. europe was up one. and down 0.3, most of the case volume is above expectations for coca-cola. i don't see any outlook. >> north america was up 2%. did you already say that? >> i did, versus 1.1 estimate, and then revenue just slightly below, the currency represented a 5% head wind on third quarter comparable revenue. >> we knew that was going to be an issue because companies that do a lot of business overseas is strong. >> 5% on revenue, 7% head wind on net income, sorry, operating income.

operating income. pacific case volume up 3%, that's below. they were looking for 6.1. now it's only 3, so where is that? that's probably -- >> what number is that? >> pacific. >> up 6.1 was the estimate. >> it was up three. eurasia and africa was up 11, that was above estimates, up nine. >> mukdar kin is making interesting comments. he says you look at what's happening around the globe and there's volatility in the worldwide economy. we have been able to crack the calculus for growth in the environment by investing in our system and our brands to ensure our global portfolio is more relevant and healthier today than it has been. interesting, just the comment that they've been able to crack the calculus for growth in this environment, that they admit is a difficult environment. >> the company earned $1.92 last year, if it hits its fourth quarter number it will earn $2.

forecast is for $2.20 next year. it's growing at 10% which would be ten times earnings. >> you forget everything they have. he talks about the healthier stuff, honest tea, gold tea. >> they don't have snacks. they don't have any salty snacks. if you're a soda company you should have salty snacks, snacks, with lots of transfats, my favorite. anyway, blackrock is out with its fourth quarter investment allocation recommendations. joining us is bob doll and jeff rosenberg, bob doll is senior adviser at blackrock and jeff is in charged of fixed income investing at blackrock. bob you saw unitedhealth care you like the numbers? >> sweet numbers, the stock's been good. >> no matter who wins it's good? >> probably a little mix there. >> hospitals are bad but hmos are good either way. >> i think they're generally

okay both ways. hmos are part of the solution no matter which way you tackle health care. >> you own any coke or do you like coke? >> yeah, look, i think what you clearly brought out the theme is domestic earnings versus non-u.s. earnings. the domestic earnings in this third quarter are coming through pretty well and the non-u.s. earnings have some cracks because there's weakness in economies overseas. portfolios more geared toward domestic companies have been and are continuing to fare better. >> oh, goldman is out. are you going to do that? all right. i wanted to ask jeff, while i got you here, i read this about greece and i was like no kidding, greece bond prices rose to their highest level this year, after fading concerns about a breakup of the eurozone. >> europe has done a lot to kick that can down the road with what draghi's done, basically opening up the balance sheet guaranteeing they'll fund

themselves out to three years. the other big headline is the first story there about whether or not spain is going to ask or not, that's what we're waiting for. clearly europe has reduced the breakup risk and as it's done that, the effect on u.s. treasuries and the interest rate outlook is that it's eased the demand here for safe haven assets. >> can i tell you quick, 2.85 is better than had been expected. 2.12 was the estimate for goldman sachs. the number looks like it's coming in stronger than expected. >> revenues are better. >> increasing their quarterly dividend to 50 cents a share. >> it was whatever 1 $1.47 divided by four. so it's up, what is that, less than 10%. >> the company says it continued its leadership in investment banking, ranking first in worldwide. >> so 50 cents a share? >> 50 cents a share.

>> gone from $1.47 to $2. that's a huge -- >> no, from 46 cents to 50 cents a share, so 4.6% would be 10% so yeah. >> look into europe, is it realistic to expect the eurozone to stay together in its present form over time or are they just kicking the can down the road? >> they're certainly kicking the can down the road. but i think what they've done in ensuring that the short term, they've given themselves the option to keep it together, and this is a very long process. this is not a one year or two year. this is going to be a ten year long process and getting the european central bank involved as they've done finally is what the market has been looking for, for a long time. they were' the only institution large enough to give politicians enough breathing room to repress the financial markets, to keep the bond markets at bay so that politicians have room to do all the very difficult things it's going to take a decade to do. as i was saying about the -- >> what would you, as a fixed

income guy, corporates? junk? treasuries? where would you be with, let's say i had personal money and tax free money. >> the longer term theme we're ex-pretsing in our blackrock direction investment theme, treasuries and safe haven assets is not a safe haven because you have a lot of interest rate r k risk, you have a lot of inflation risk. understand that credit risk gives you a degree of inflation protection. why? because company's credit risk goes down when their nominal revenues go up. that's what happens in an inflation environment. we should see investors reducing interest rate, their treasury, their agency, their mortgage-backed security, their safe haven asset allocations and buying corporate bonds, buying high yield, buying higher risk municipal debt, where you're doing the credit risk analysis. substituting credit risk in this environment is the right strategy right now. >> europe gave us the biggest, prettiest band-aids we've seen

crisis-to-date. big and pretty means they're substantive. the band-aid point is, but that's not the final solution. as jeff said, this is a long slog, but for now, that's the story. >> put some neosporin on the wound? is it healing or are you just bandaging it up? >> slowly. europe is going to be on the front page of the u.s. papers again, we don't know when or how. was that the meeting that solved the problem? they could have 15 perfect meetings in a row. >> greece will stay now, people think greece will stay now. >> i think the jury's out. there's huge interest rate and currency risk in investments with regard to our treasuries, and you better expect that china and some of these other countries are going to start looking to corporates, they're going to start moving away. watch it. >> but we won't see it until qe3, until -- >> we are in a bubble, we don't have real interest rates right now, we don't really know what

real interest rates are. >> that's a good point and the point we make as well. all the qe3 and the monetary policy not just in the u.s. but also europe is making interest rates below the level of inflation. that's not normal and that's one of the main reasons why you want to be allocating to areas of the market where the government and the fed and the balance sheets are not using their balance sheet to repress those interest rates where you get a fair amount of compensation with the ritzing that you're taking. >> that's your analogy if you jump from a 50-story building you think you're flying for 49 stories. i mean we -- so you believe we're setting ourselves up. >> it's not just fiscal policy. it's monetary policy. we have to get both in order. we need a grand bargain next year, that's the fiscal policy and we need to do things on the monetary side. >> we'll end on this point, this hasn't gotten as much attention as it should but the election as much as it is about fiscal policy is also about monetary policy. romney's advisers have come out and said -- >> you don't think bernanke has

done a good job? >> i think qe1 and the interventions during the crisis -- >> you're impleeg qe2 and qe3 were less as effective. >> whether they're more effective i'm skeptical but the election is about monetary policy and the role of easing money policy and their contribution to the crisis. that's something the romney campaign has come out and said they'd reverse. >> you go shopping together for your ties? >> yeah, we have similar ties today. >> for the record we did not coordinate. >> no. >> the odd purple guy. >> i wore that on friday. >> a couple of days late. >> thank you very much. we have been getting earnings coming in, coca-cola that just came out with earnings, the stock is indicated a little bit lower, unitedhealth care. united is higher and goldman sachs big financial beating expectations by quite a bit, 2.85 versus the 2.12 but the

street had been looking for, came in with a lot of different things, raising dividend. the stock is indicated slightly lower although the knee jerk reaction was slightly higher. we'll look at more of the numbers, expenses $6.5 billion, 16% higher than the second quarter. we'll dig through more of the numbers and show you more of the stock's reaction after we come back after the break. in the meantime we get you ready for tonight's presidential debate. billionaire businessman donald trump will be around after the break.

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welcome back, everybody. we're still waiting on johnson & johnson's earnings. joining us on the doan is donald trump. you are a real estate guy and also dabble in stocks. would you indulge me and talk through some of the earnings, if anything caught your eye. unitedhealth better than expected, coca-cola in line, goldman sachs better than expected although the last time i looked at the stock it was lower. anything jumping out? >> no, not really because of watching your show i bought some of the stocks and they're treading along. goldman was finally up, this was not a great one.

you go over years and years and you see goldman but goldman certainly hasn't been performing great but it's still a fantastic company. i would say this, that it's treading along. lot's going to happen after the election one way or the other. >> tonight we're going to be focusing on that second presidential debate, that's a huge issue. what do you think has to happen? we know you're a mitt romney supporter. what do you think has to happen this time around? >> first of all i think the audience is going to be huge, it's going to be tremendous, maybe bigger than the first audience because people couldn't believe how bad obama was in the first debate and i think people are watching. there's tremendous pressure on president obama to perform and if he doesn't perform i actually think it's going to be over because he was so bad in the first debate that people didn't believe it. i guess maybe some did but a lot of them didn't. frankly, i think there's tremendous pressure on obama to perform. >> i was watching and i watched the whole thing but i think he was struck like the rest of us how good romney was. >> i agree.

it's a combination of things. it could have been, it's like you play golf and somebody keeps getting birdies, gee i'm not playing that badly but the truth is romney was getting birdies and obama was getting double bogeys. he was just not doing well. he was off. >> donald this is david walker. >> hi, david. >> don't you believe the governor has to be prepared to answer questions about the type of tax expenditures that need to be on the table for consideration? >> yes, i think that will come up, i think, david, things that hadn't been brought up in the last debate that were questions everybody expected will be asked tonight. i think it will be tougher. i think the president will come out a lot stronger and with more enthusiasm. he had no enthusiasm aside from everything else, and say what you want about biden, whether you liked his debate performance or not, at least he was enthusiastic. it looked like he wanted to be there, but the president didn't, he looked lost. so i think you know again, i think there's tremendous pressure on him to perform more

so than mitt. >> donald, you are an executive, you are a businessman, you probably would be surprised to learn that the u.s. government which is the most complex entity on earth doesn't have three things that you have in your businesses in any organization has to have in order to be successful. plan, a budget, and performance metrics. >> right. >> and you wonder why we have a problem. >> well it's a problem and we've had it for a while and it's gotten worse and over the last three years it's been ridiculous. david, i watch you all the time and i think you're terrific and i must tell you, you have so much common sense. i don't know if that's electable, common sense, you understand that, because maybe people don't want to hear what has to be done but the fact is that our country is in such trouble and we're going so far behind and every day that this continues, it's going to be tougher and tougher to come back. you preach that better than anybody. >> the good news is, is that on our unprecedented 34-day

national fiscal responsibility bus tour the least support that we got was 77%. that's quite a bit more than we need for the senate. we just need some leadership, that's our big problem. >> donald, you bought johnson & johnson. >> i did. >> the company reported earnings and it was $1.25 a share, four cents above expectations, revenue $17.1 billion, above estimates of $16.98 and for the year the company sees 5.05 to 5.10. >> the stock is indicated slightly lower. it's a tough market reception because the similar story with coke. >> i didn't see it indicated lower really. the ask is $69.40. >> sorry, $68.40. big widespread still to say. >> becky and joe, have you ever told david how i bought stocks? i watched these two and if i like some ceo or some person, i've never bought stocks in my

life essentially. then a couple years ago i'm watching, i'm doing our big hot trump tuesday which gets the highest ratings but i'd never say that of course, but i'm watching them and they talk about different companies. one of them was johnson & johnson but many, many companies and one of them was bank of america. i guess it was in the fives, joe, where we started having these conversations. but it's up to something close to ten, but they're essentially my stockbroker, david. i know nothing about this business, but it's doing okay, because i watch. i like the ceo, i buy some of the stock. >> i think you're going to make it. i think you're doing fine. >> it's doing okay and they are my broker, there's no question about it. >> hey, donald, what other stocks have you dabbled into, that was why we were talking about earnings off the top. johnson & johnson. were there some tech names mentioned? >> there was, intel was doing great and now it hasn't been doing as well. i've always wanted to buy apple and i never had the courage to pull the trigger because i just see it going up, up, up, like a

rocketship and when it hit 700 i said absolutely not i won't do it but one of the things, one of the mistakes was i just never could see apple at that kind of a number. one of the problems that i have with apple is every month they have to reinvent it. they have to come out with something new, new, new, and that's a a tough business. there's something about real estate that i like. if you have a good building in a good location, you have a good tenant, there's something i love about it. apple is phenomenal, but every single month they have to come out with something new or they' they'll cease to exist. >> my ipad, five years from now what does it have to do to make me excited? >> that's a wild business but you know you have to say they played that game better than anybody else ever. >> they're bringing out a mini ipad, is that good? do i want it smaller? i don't know. do you? >> well they're going to have to keep bringing out things, joe, other wids er thwise they're no be doing anything. when it hit 700 i said now i

know i'm not buying. >> they should not bring out a maxipad, a maxiipad. >> donald, thank you, very love you. >> thank you very much. >> i don't need it bigger. then it's a computer. >> right. >> why are you smiling? >> no reason. let's check the futures after getting all of these earnings we've had in the last 45 minutes, united beat expectations this morning, coca-cola in line at 51 cents, johnson & johnson beat on the boment bottom and top line, goldman sachs raised its dividend, and you take a look futures are higher, dow up close to 70%. the cio of northwest university with our "squawk" endowment series continues after this break. they have teachers... ...with a deeper knowledge of their subjects.

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let's get some reaction to those coca-cola earnings. david silver is wall street strategy's equity research analyst. most of the volume was pretty good. pacific was not good. did you notice that david? >> it was only a 3% gain, i was expecting more in the line of 5% to 6% across the pacific. in the quick read through the earnings release it outlined thailand and india which showed me there was a little bit of a problem in china. i'm looking on the screen and

looks like coke is down a little bit in the premarket and that could be why. >> that represents a place where the company can grow? >> absolutely. it's a huge growth area all across the pacific, but china specifically and they have been investing billions of dollars over the past few years. i think they were up to $3 billion last year so that is a huge spot for investment in china and india they're trying to share a little bit of the operations. >> if you multiplied let's say they did what you said, three and you were looking for six or whatever, if you multiply out 3% and you're talking china, you're talking about a lot of coke, aren't you? >> absolutely. there was an interesting line in the press release that said that they added 450 million units year-to-date, like adding another russia to the entire world. >> another what? >> another russia. >> wow. >> the volume of russia, so that's an interesting little tidbit there. >> that's interesting. so you think okay, that's one area pacific but that's where

the growth is and it was shy there so maybe that's the one fly in the ointment today. there was a currency stuff, but what are you going to do. ? exactly, 5% currency head wind is expected. >> david thanks for your time. >> thanks so much. >> when we come back, reaction to johnson & johnson and goldman sachs earnings and the "squawk" endowment series continues, the cio of northwestern university, how he is handling a difficult market. "squawk" will be right back. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused.

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earnings alert. we'll dig through the goldman sachs report with doug sipka. >> and "squawk" is going back to school. >> who's with me? come on! >> we'll continue our endowment series with the chief investment officer of northwestern university's endowment fund. plus breaking economic data. the latest read on inflation, consumer price index numbers due out at 8:30 eastern time. the third hour of "squawk box" begins right now. ♪

welcome back to "squawk box." i'm joe kernen along with becky quick. stop whistling. >> i'm not whistling. it wasn't me until you said it. >> guest is david walker, founder and ceo of the comeback america initiative. david handing out money today, passing it out. we usually don't, guests do not have to pay to come on. lot of people accuse us of that. something is wrong with that picture. that's andrew jackson on a $10 billion. it's not a $10, it's $10 million. it's what our entitlement, unfunded liabilities are growing at $10 million a minute. >> total liabilities and unfunded promise grow by $10 million a minute, $100 billion a week and what the u.s. burden barometer is about, $70.9 trillion and growing. >> jackson's picture, he's the first guy that paid off --

>> the only guy, the only president that paid off our national debt. >> he hated bankers. >> and this's not going to happen again. >> john adams, why do you have him first -- >> he was vice president, second -- he was the first vice president of the united states. >> so? >> what the heck. >> you got to pick someone. >> he was the second president of the united states. >> all right, and then on the back you got, all right, $10 million a minute. this almost like at night you could tip your driver with this and he would -- >> if it was really dark. >> it's dangerous. >> if it was really dark and you didn't mind breaking the law which i do not advocate. >> you do not advocate breaking the law. with as much money the fed is printing we're paying off our debt with crap worth as much as this. >> i have a zimbabwe bill. you don't want to go there. >> i won that $100 trillion, worth 32 cents. what were you doing? you got another earnings report? >> just looking through, some of the stocks turned around, we have heard from a lot of major

companies reporting quarterly results, we already had three dow components. goldman sachs earned $2.85 a share for the third quarter, well above estimates of $2.12, goldman raised its quarterly dividend to 50 cents from 46 cents a share. that stock has just turned positive. it was positive right out of the gate, it turned negative i think when people were looking at some the things like expense ratios and things that have gone through. we'll talk to an analyst in a little bit. it looks like it's trading higher in the premarket as well. coca-cola also at this point trading higher. it came in, in line with profit estimates for the quarter, 51 cents, when you strip out certain items. coke's worldwide and north american case volume did come in above analyst estimates. an analyst added 450 million units in case volume, like adding another russia but when you look at the china business the growth slowed to 2% in volume growth. that was for the quarter, for the year-to-date it's 6% so that is showing some rapid -- >> drinking less coke? >> i don't know.

that's not what we heard from yum brands when they talked about kfc. you wonder why coke would be any different. >> it could be product mix, they might need to look at their product mix. >> we'll hear more about that and watch and continue. johnson & johnson another dow component also out with earnings, $1.25 a share for the third quarter, four cents better than expected. revenue was essentially in line, maybe slightly higher than had been expected and that stock you can see is trading a little higher in the premarket, too. also united health group earned $1.50 a share for the quarter, 16 cents better than expected and increased its outlook for the year. it talked about strength across all of its units and that stock has been kind of off to the races since it came out this morning, it's been helping the dow overall and you see green arrows across the board. president obama and mitt romney will be squaring off in the second presidential debate tonight, this is a town hall format and all day long cnbc is rising above the campaign talking points to bring you an in-depth look at the energy

factor in the presidential election. brian shactman will bring us a special report on fracking at 8:20 a.m. eastern time and cnbc's coverage of the debate starts tonight at 7:00 p.m. eastern with larry kudlow and maria and carl at 8:00 p.m. in corporate news yahoo! is hiring a former google executive as its new chief operating offic officer, hen reek de castro is the latest addition at yahoo!. this was melissa meyer's first announcement after coming back from maternity leave. he's going to be eligible for a $58 million compensation package. >> oh, $58 million, why bother to go over there. $58 million?! he must be good, right, david? n >> i guess. i got it covered right here. >> yes, keep the change. just give out six of them. >> i want some performance. >> you do? >> that's right. >> let's get a check of the

markets as we were talking about the u.s. equity futures are higher. the dow futures getting help from the three dow components that came in with earnings. dow futures up by 71 points, the s&p futures, the nasdaq futures are also higher. overseas in asia you did see green arrows as well when the markets closed the nikkei was up by 1.4%. you saw more modest gains in the other stock indices around the region, in europe you're also seeing green arrow, the ftse up by 1%, the cac in france up by 1.3% as is the dax in germany. and goldman sachs rolling out quarterly results earlier this morning. joining us on the "squawk" u.s. in line is doug sipkin, senior analyst at susquehanna financial. they raised their dividend, but then we saw the stock trading down at some points in the premarket. what are people focusing on in the details? >> yeah, good morning. first off i would say the real earnings are $3.32 because there is a pretty sizeable loss on a gain on their own debt, so

that's about 40 cents, so on that basis, they did $3.32, close to a 10% r.o.e. so pretty impressive quarter. i think the initial sell-off probably related to the fixed income trading business which was flat. i think probably seeing citigroup yesterday that was maybe a little bit greater expectation, but all in all, it's much better than expectations, and has probably some positive implications for estimate revisions. >> for estimate revisions for the rest of the year? >> yeah, into the fourth quarter, exactly, because september and october have clearly been a big improvement in the debt capital markets, which goldman is leveraged to. >> we noticed the expenses, $6.05 billion, they said it was 40% higher than a year ago, 16% higher than the second quarter. how are they tackling that? >> that's a combination of seasonality and higher revenues, higher expenses. goldman implemented a plan to lower expenses over time but usually with the revenue ramp

like this, it's almost impossible to drive that type of leverage. also goldman is traditionally accustomed to lowering its compensation in the fourth quarter to true up for the whole year, whereas they keep the rate flat in the first three quarters. >> 44% for the comp. ratio? >> that's correct. and i think for the full year basis, probably be something in the low 40s, maybe even high 30s, we'll have to wait and see but they'll do that in the fourth quarter. they don't do that through the first nine months. >> if you're considering revising your estimates for the fourth quarter bringing them up, what would you tell people to do with the stock today? >> i'm not going to comment on what our estimates will be. i would say you're close to a 10% r.o.e. this quarter. september and october were better months, clearly qe3 is helping the fixed income capital markets. we've seen that continue into october, so i think my backdrop is probably pretty good. >> you would tell people to buy the stock today? >> i'd probably expect to consolidate a little bit of a

big move. the overall buy is the whole space. i expect the stock to be higher over the next week or two. >> doug, dave walker. from a macro standpoint, lloyd blankfein has been talking about the risk associated with the fiscal cliff. what, if any, comments do you have about the potential implications for the financial sector and in general and goldman in particular, if we go over that cliff? >> yeah, so it's a good question. i would say with qe3, the capital markets have improved quite a bit. if the fiscal cliff does not go the way the market hopes or if it's not resolved, that could certainly be an impediment into the momentum we're starting to see in the market so clearly there's some uncertainty about that and that needs to get resolved the right way but if it does, i do think that the capital markets and these stocks in general will continue to perform really well. >> doug, we are just getting news coming from a press

release, vicram pan bit pandit is stepping down as ceo of citigroup. >> that is a huge surprise. >> president and coo john havens also resigns from the company. >> wow. they're saying -- >> that's pretty surprising. we have to get the details. >> is this walking a plank or what? was it not a good number yesterday? >> no, the citigroup number was pretty impressive particularly on the capital market side. >> i thought that was the turn for the company. >> there's something else there. >> now just reading through this the chairman of the citigroup board of directors michael o'neil says "we respect vikram's decision since his appointment until the present time he's restructured and recapitalized and strengthened and refocused

business." >> you know how they say that. you never know whether we're happy about his decision to honor what we wanted him to do sometimes. i don't know. >> he did seem like he made it through the roughest time for that company, finally starting to turn the corner. >> ceo and coo, correct, so both are gone. >> you're right, coo and president are gone, too. >> what? >> havens is gone, too. the coo and president. >> top two. >> i don't know what to make of this at this point. >> ahh, yeah. the fundamentals we have in place are solid, we are on the right path, this is corbat talking. in this market we must allocate our resources and our products with the highest potential and productive business. >> stock is trading down on this, 36.66 was where it closed yesterday and the premarket it's at, well the bid/ask is 35.72 to 35.75, and -- wow.

>> and here we're back to, okay, so mike o'neil, chairman of the board says we respect vikram's decision. we don't see anything about havens, about whether he respects him. >> he continues, mike is a proven hands-on leader known for his focus enhancing people, holding people accountable and practicing sunday risk management. >> here's pandit, we've emerged from the financial crieses as a strong institution, well positioned for continued profitability, having refocused the franchise on the basics of banking. given the progres made in the last few years, i have concluded that now is the right time for someone else to take the helm at citigroup. i could not be leaving the company in better hands. mike is the right person to tackle the challenges, difficult challenges ahead, 29-year record of achievement in leadership at the company. i will truly miss the wonderful people throughout this organization but i know that

together with mike they will continue to build on the progress that we have made. >> wow. >> so you got the chairman saying we respect pandit's position, or his decision, and then pandit saying that i've concluded now is the right time for someone else to take the helm. >> we have chris whalen on the phone, we always turn to him with these issues. chris, wow, what do you think? >> well, as you know, i've been calling for a change for a while and i think this is a good development for citi. they're reaching inside and picking an operator who has got broad experience in the company so that's good. pandit should have stepped down years ago. i saw him as a place holder emerging from the wreckage that was left behind by robert rubin and a completely dysfunctional board. i hope this is an indication the board at citi is getting itself together.

>> when they say "we respect vikram's decision." it was his decision to honor what the board was asking him to do? >> you don't know. they don't give us much insilgt. >> what about havens? >> as i say he's an insider. this is the first time we've actually had somebody with operating experience running this company. >> no, corbat is the guy who is taking over. havens is leaving. the president and coo is also out. >> right, but i believe -- i haven't seen the news reports but i believe the fellow they were picking is an insider. >> he was running europe. >> the two guys leave suddenly on the same day. >> having the top two guys leaving the same day and doug the stock is not reacting positively. >> citi has been a mismanaged and misgoverned company for a long time. all i can say is i think change was needed. i haven't really had a chance to assess what they've announced but i can only say it's better

to have pandit and some of the other people leaving the scene because we need new leadership at citi. that's the bottom line for me. i've been saying that for a long time. >> the stock market is not reacting with your same sense. the stock is down 1.3%. >> it was up yesterday 2% for no reason. the numbers weren't that good yesterday. >> people immediately say what do i not know about what's happening. >> precisely and i think that's why the stock is trading down. you got to realize that this is still a franchise, trying to find a reason to exist. they made a lot of money during the subprime era but they can't do that anymore. pandit has been kind of saying this, telling us about new initiatives every six months and they've all been different so for me as an analyst, that hasn't been that encouraging. i'm hoping if we get a change in leadership, maybe we're going to see a little more focus and a little more critical assessment of what they should do with the assets they have. >> what do you think needs to happen, chris? >> look, this is a bank still

funded and very focused outside the u.s. their domestic footprint is not that significant. they're out of the asset management business, becky, so all they have left as pandit was saying yesterday, commercial lending, they still have the consumer business and they have capital markets. that's it. >> havens said he had already been planning retirement and decided to step down given vikram's decision, he decided to leave at the same time in light of pandit's resignation. >> um-hum. >> something else i vaut, oh and pandit is not even going to stay on the board. >> this is effective immediately. this is not some transition >> that is a little unusual, when you break and step down as ceo, you usually stick around for a year or two for continuity and the fact he's stepping off the board is probably raising questions in the minds of some traders is my guess. >> i have two people at the top, leaving at the same point in time with as little information as we have, citi needs to fill

that gap and provide information. >> all i can say is sheila bair must be smiling this morning. >> michael corbat is the ceo of europe, until this point, middle east, and africa and as you were pointing out this is a company with a larger footprint internationally. is that why you see him stepping into that place? >> well not -- i think it's important to remember a lot of the bank's key business relationships are in the middle east and europe, more of their funding comes from outside the united states, and from domestic deposits, and they've always been that way. remember during the ldc debt crisis in the '80s with citi. citi was one of the first banks in china. the question is, can you turn that into a real stable and profitable franchise? every other quarter we've had noise in their earnings and balance sheet and i think as an analyst i've always wanted to see them make this business run a little bit quieter, if you will.

even the write-off of smith barney, that's an ugly thing because it says they didn't make money on that business and in order to sell it, they had to take a loss. >> you know, jim cramer is on the phone, too. jim, i saw what you tweeted about pandit leaving after a terrific quarter which is worrisome. how should we read this? >> i'm listening to mr. whalen and all well and good, you know, pandit finally got it right. this was an absolutely terrific quarter, there was so much that was good here, international was absolutely terrific, you had very good net interest margin. you know, i got to be really blunt about this. i don't know what the heck is going on here. havens i've known since when i did a ton of business with morgan stanley, he's a stateup guy, havens is totally standup. i have no idea what's going on and this is major and something is very wrong. >> you're right, jim, apparently a lot of, we're hearing top citi

executives, no names here but they're totally taken aback by the announcement. >> it's shocking. i like to speak to the management team after the quarter but it was so terrific i was looking forward to speaking with them sitting down as i do every quarter to say listen, everything's finally coming together, you really nailed it. >> nowhere does it say, it doesn't say intervictim anywhere. it's weird to get a guy, the two leave and you immediately have a guy you're making permanent ceo is a little weird, too. >> the key point you have to make though -- >> pandit is young, people expect pandit. >> he wasn't a strong operator, jimmy, come on. >> he's really turned the company around. i understand with smith barney but the guy they hired turned a joke company into a great company. it's shocking. >> when any banking executive leaves at the end of the third

quarter, that's the question, because normally you want to go through the year end, get your proxy done, go to the annual meeting, get the gold watch, and then you hand off the ball. >> and jim, i think that's the point. >> that's ridiculous. pandit turned this bank into an international juggernaut. he had to deal with the government, the government was telling him everything to do, everything the government was telling him to do is bad for business and he tried very hard and havens is just -- havens one of the greatest people i have met in this business. he's sensational. everybody knows havens and this was a turnaround team and these people would take a bullet for pandit, take a bullet forehavens. i don't understand what the heck is going on here. >> like i said the timing is suspect because when somebody walks out the door before year end, that does raise questions. >> the day after a good quarter, the day after the earnings announcement, it's effective immediately, he's off the board immediately. >> right. >> geez, maybe it's entirely

possible that he somehow orderly -- >> this is not orderly. >> at least start it after the end of the year. >> wikipedia you google it, disorderly, it will say when pandit stepped down. we need answers. we need answers. >> to that point normally you go through year end and the ceo has to sign off on the public disclosure and regulatory disclosure and you hand off the ball to the successor. it's a fair point about the questions. >> the bottom line it's very unusual and as a citi shareholder, i want to hear more what the heck is going on. >> yes. >> you finally got it right. what a quarter. what a great quarter, it was the best of the three so far. >> what i can tell from you an executive at citi, an insider, is that what i'm being told at least is that they think of michael corbat as a terrific operator, terrific guy and ex-solomon brothers guy so from their perspective for someone who is an insider on this saying

yeah, okay, this is good news. >> exactly, becky. the key relationships for this bank are in the middle east, let's be fair, opec, a lot of other commercial relationships. >> latin america was a standout, it was mexico. tremendous growth in latin america. this guy put together an amazing team in asia, too. i mean i don't know. look, we got to figure out -- >> you're making money in asia, jimmy, really, come on. they've been trying to make money in asia for 100 years. >> it's hard to hear over two years. >> put us on set sometime, we'll have a good time. >> kayla tausche? >> i think i share in the sentiment that this is a complete surprise to many people. you saw citi's shares rise 5% on yesterday's earnings, and the sents that i sense i'm getting from insiderless at citi, the executives thought the numbers were good but didn't know how good the market would perceive them until they saw the stock jump. the shares pulled back 2% today so you're not giving up the losses but there is the complete

shock here. >> i don't understand why you would do it in this manner. >> i think that's the big question. you had a perfect opportunity with everyone on the line yesterday to ask the questions that everyone is going to be voicing today. you passed up that opportunity. awe announced it today. there is a lot of suspicion on that front. recording corbat, two things, he has managed the two businesses that are not the big standouts, jim mentioned latin america but he's managed amia for all of the volatility has stabilized in the last quarter and managed citi holdings, the bad bank for the first time this quarter, citi holdings fell to $171 billion in assets, that's less than 10% of citi's overall balance sheet. he knows the bad bank in and out, knows the weak innocence europe. asia is slowing down. i'd be worried about asia a little bit but corbat is, has proven himself a good manager in the volatile areas. havens is a top recruiter of

vikram. everyone expected when vikram would leave havens would leave. with regard to citi what happens to the big executives that were rumored to be in the running for vikram's ceo position, one of them jayme farese, a well-known high-regarded securities banker who has risen the ranks through citi, people are wondering let's look at who were the candidates previously and do they stay. >> jim cramer, another question, this was just brought up and it's hard to get your head around some of the things. some people say they rejected vikram's comp. at the annual meeting. i still don't understand the timing, i don't understand why it would be done in this manner. >> this is a complete shock. really no one expected this whatsoever. the divisions were all in very good shape. you know i don't want to for a second tell people that there was anything in the works to make this happen.

>> that's what i mean, how old is pandit, jim? >> i'm not sure. >> 50s, right? >> 50s, yeah. >> why was anyone even think being replacing him? >> there was no one. he finally got it right. this was the quarter where you give him a big raise. he was under a lot of pressure. >> jim, he didn't improve his pay as it were at the shareholder's meeting. you have no chance to raise the pay. they ramped up their succession planning this summer, the board had gone to the drawing board, if vikram were to get run over a bus who would be our successor? they came up blank, started to go back to the drawing board, figure out what executives can we cultivate, that happened throughout the summer. august was when they really started ramping that up. >> but vikram didn't get hit by a bus. >> he threw him in front of a bus. this is crazy. >> he might have been hit by a bus, called the board. >> i think people are going to go back to yesterday's call and looking for any smoke signals.

john gerstbach was asked several times about compensation. >> what did they say? >> he said i'm not at liberty to discuss something that will ultimately be up to the board. >> it will matter tomorrow? >> he's 55. and he's a capricorn. >> this is one of the best co quarters. corbat is really great, that division did very good but we have to understand vikram pandit 24 hours was the belle of the ball. >> 55 years old and i can tell you, jimmy, someone 55 or 56 has a long way to go, jim, right? >> yeah. i mean this guy was going to, i mean he finally got it right. havens isn't old either. hedge fund together, gee, something's wrong here, something's wrong. something's wrong. >> doesn't add up. >> no. >> and kayla's right, it's bizarre when they had everybody

on the conference call yesterday to come out and say a day later, nevermind everything we talked about yesterday. >> it was interesting my producer and i were discussing this yesterday, almost the entirely reporter call and analyst call were handled by gerstbach. we didn't hear a lot from him. we thought that was interesting. >> we're going to come back. >> as joe said a lot more to come on this surprise citigroup. we also have cpi coming up. "squawk" will be right back. duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. tdd#: 1-800-345-2550 after that, it's on to germany. tdd#: 1-800-345-2550 then tonight, i'm trading 9500 miles away in japan.

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and rest even better with sleep train's risk-free 100-day money back guarantee. but the best rest event ends soon at sleep train. superior service best selection, lowest price, guaranteed. ♪ sleep train ♪ your ticket to a better night's sleep ♪ gerding. welcome back to "squawk box." we have september cpi out up 0.6 on headline. no revision to the last look. x food and energy up 0.1. core is 0.1 light, headline is 0.1 or two heavy. year over year on headline it's up 2%, that's 0.3 hotter than the last look. if you looked at stripped out good energy core year over year that is up 0.2, it matched

expectations but 0.1 hotter than our last look. to summarize the fed will look at core and they'll say eh, nothing to worry about. everybody else will continue to think maybe the best correlation with stocks these days is the reflation trade. back to you. >> all right, thank you. we'll get back to citigroup and i don't think, who do we have? we don't have faber or -- >> jim cramer and david faber are on their way to camera to talk about this. >> so we were, you know, citigroup was very interested in making sure that these numbers were, yesterday were analyzed correctly, because there was a lot of noise in the numbers. there was a lot, cvs, dva, the morgan stanley stuff and the tax benefit but they wanted us, they gave us a heads up to know what to look for that it would be above expectations and the stock acted withal. >> the one point i heard several times over and over again is operating leverage in every single line of the business is

positive. operating leverage is positive in every line of the business. >> do you really believe that sunday night no one knew what was going to happen on tuesday? >> i haven't thought about that. >> well that's what i'm thinking about now and i don't believe this -- did this happen yesterday? >> it cannot have happened in a day. >> it could, i guess. >> it could have, but unlikely. >> what is more interesting -- >> on monday you have everybody on the call. >> they went to great lengths to get this number out. >> kayla said they didn't play a big role on the call which was unusual. >> the stock reacted positively, jimmy talked about universal accolades for pandit for the quarter. >> one of them did a high "v" on "squawk on the street," hey for vikram. >> finally turning the quarter. >> you did a high "v"? >> i think cramer did. >> kramer did a high "v." >> we need to find out more

because we're speculating. they had a couple of things, had a great quarter and he's had problems with regard to getting approval for compensation. maybe there was an issue where -- >> could be as simple as that. >> could be as simple as that. am i going to get rewarded, am i going to get rewarded adequately going forward? i'm not saying that's it. i'm saying that's the only thing that could happen that quickly. zbleps' load >> he's loaded, sold his hedge fund to citi. loaded, hundreds of millions of dollars he cass. >> it's not all about money. it's about being paid fairly for what you produced. >> earned success. >> jpmorgan put a benchmark for compensation there, wells did, goldman did this morning. citi didn't have really much on compensation yesterday. that could have been an issue. the other thing that happened in the third quarter they not only negotiated the sale of the next 14% of morgan stanley, smith barney but they negotiated pretty much the price for the entire sale and say we can expect this to get off our books, that was a key thing that happened to citi holdings, below

10%, the key thing that happened. you're right, joe, they were trumpeting these numbers yesterday. if you look at the media reports, they're really split down the line. half of them say profit fell 88% on a lot of write-downs and bungled math and funky things that were happening. the other half said citi was a clear beat. people were split down the line on that. >> i'm looking at the $35. we need to just remember that that's $3.50. it was a $40 stock during the crisis, it fell down to -- >> it was also split. >> that's what i'm saying, one for ten reverse split that got it back to 35. it's $3.50 and when they did the reverse split at five to bring it back to 50 it immediately went back to 35 or so. so this is a $3 stock. we can trump it that it's turned around and it's had a lot of help from the u.s. government. >> it's a $3 stock that also have returns. >> don't they have a lot of tax, they can shelter their earnings

because even though they didn't go bankrupt they got to keep all of the nols. >> they had the lowest return on equity of any bank, 1% return on equity. z>> it went back down to where e bought it. >> that's an unbelievable chart we're looking at. >> that's where it is. so before we get -- it's not stock of the year at $3.50. >> you can compare that chart to any bank. no bank is out of the woods. >> jpmorgan did a one for ten reverse split. >> no, they didn't. >> pnc didn't do a one for ten split. bank of america, at least it's back to double digits. >> i don't think you can split $5, can you? >> they did a one for ten reverse on five and went to 50 and now it's 35. >> bank of america is almost double digits. >> $9.44, wells fargo is

probably where it was prefinancial crisis. isn't it? citigroup definitely got in more trouble. >> but the havens talk is interesting with chris whalen saying i expected this to be john haven's job, from my perch and the people that i talk to, no one expected this to be john havens' job. they expected that where vikram pandit went, john havens would follow. they were two birds of a feather who would definitely flock together whenever push came to shove, but in this release it says that havens had already been preparing to step down at year end, and arguably you could say perhaps that's when he was given guidance that vikram pandit would also be stepping down, which would make a little bit more sense for a bank's ceo to leave at the end of the year. >> the timing on this is so messy, so sloppy. it raises so many questions and it's going to leave investors wondering what exactly happened, and if there's more, another shoe to drop if there's something out there. >> the board has to fill in the blank why now. that's the key. >>t.

>> i like the idea that he just, that there's nothing wrong and he just said you know what? if i'm going to have trouble getting paid after i've stabilized this bank and put up a good quarter, then i'm out of here. >> it could be as simple as that. >> you ask any bank ceo when the right time to leave is and i guarantee any one of them will say not when you're in the middle of a turnaround or a crisis because you don't want to be seen as abandoning the ship before you've learned to steer it. you also don't leave immediately after a good quarter, literally the day after. >> i did like what whale. said, if you didn't want to sign everything at the end of the year for, you know, for all the sarbanes-oxley. >> here you go ahead, you sign this. >> then i can see that, too. >> as david pointed out before we're speculating at this point because the company has not given us anything to go on other than we know this is strange timing, this is a weird way for things to come out and it is raising a lot of questions. >> i still want to know did they find out after yesterday, after

the results yesterday or did they know going into the weekend or in the weekend did they know? >> they had everybody on the call yesterday to answer the questions saying i can't talk to that right now, did you know. >> the board has to step up, the board has to step up in this particular case. >> and do you really think that you can cobble together a board call literally the afternoon after good results and make that decision overnight? that is stuff scheduling, too. >> if it happened let's say they didn't know yesterday and it happened today, you do an interim ceo. they had this all planned, given the permanent job to this guy. that suggested they knew they had time to prepare for this. much -- okay, kelly, on the phone, has breaking news about citigroup? >> hey, joe, i've been in touch with citigroup and employees were caught absolutely by surprise by the news as well on the trading floor there was no advance notice. just while i was on the fwophon

with somebody an internal memo partly containing messages with a note from pandit and a note from his successor. i asked if there was any insight given as to why pandit's making a surprise move and i was told no. essentially his language is i'm proud of our accomplishments at citi, i'm optimistic about the future and that's about it. and then some sort of welcoming introductory remarks from corbat. so a real sense of confusion and surprise. people felt solid about earnings yesterday and it certainly begs the question, is there some sort of legal situation that we're all not aware of or what? as you guys were just discussing like this is kind of out of the blue and they obviously, the board had it ready to go, and they managed to kind of scoop us all. >> kate, as you mentioned with the insiders being so sur pridesed, also i've heard from an insider who says while this was a surprise, they do think that mirkle corbat is a terrific guy and he's an ex-solomon brothers guy and internally

trying to look at some way to study their feed after getting such surprising news like this. >> my immediate reporting suggests he's well regarded, i'll learn more about it today but it's rare this happens, isn't it, you have no clue something is coming, nothing leaks out at all and you have a guy who is in the office one day and out the next day with absolutely no color so far. >> and ready with the new guy, we thought about it long and hard and he's the right guy for the job, in the last three hours, i don't know, you're going to put a permanent guy in -- >> you had to have known this was coming. >> it did feel like pandit was gaining traction. even jpmorgan folks were starting to tip their hat at citi and say their global impri imprint, footprint is impressive and it's helping them grow and deliver steady returns and you know, what vikram has done is remarkable. >> maybe he set it up for the

future and maybe he it's as simple as what we said, you're not going to pay me, i've done what i can do, someone else can get paid $1 a year, he gets more than that. anyway, much more to come on vikram pandit and the new ceo. we already got a picture. do you think that was fast? >> that was fast. >> we didn't know. >> probably a facebook page. >> shares of citi down 2.5% on the news after gaining yesterday, as you can see right there, "squawk box" will be right back.

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welcome back, everybody. the futures are indicated higher, the dow futures up by 63 points, the s&p futures up by 7.5 and the nasdaq up by 11. vikram pandit stepping down, this comes as a huge surprise to everybody on just about every side of this. that stock is indicated lower on that. it's not only vikram pandit, it's also the president and coo john havens, the second in command who are stepping down. the ceo who has been named is michael car bot who to this point had been the ceo of europe, the middle east and africa. the moves are effective immediately and vick rab pandit is stepping down from the board immediately as well. we'll have more in a moment. first let's get you back up to speed on some of the other major companies we've been hearing earnings from. goldman sachs came in with earnings much better than expected, well above the estimates that the street had been looking for of 2.12, gold man raising its dividend, increased 50 cents from 46 cents a share.

you can also take a look at what's been happening with coca-cola, the dow component is trading a little lower in the premarket, down by three cents. coca-cola in line with expectations 51 cents. case volume was up. if you looked at the volume growth in china it was up only 2% for the quarter, so that is showing you slowing there. john sson & johnson coming in wh earnings four cents better than expected, it's up 55 cents and unitedhealth group the newest dow component, first time to report since then, they earned $1.50 a share, 16 cents better than expected and increased the outlook for the year citing strengths across all units, the stock is up 2%. back to citigroup, jim cramer and david faber join us from the new york stock exchange. jim you hit it when you said why now? what happened with this and why did not isn't the company giving us more insight? >> i don't know, corbat is a straight shooter.

so is havens. he's an acknowledged straight shooter. i'm focused on the fact that this team was built by pandit. they stayed with pandit at a time when people felt the bank was falling apart. david, you know that this organization was finally getting on the right track. to me this was the exact wrong time for pandit. >> we can sit here and speculate. i've been trying to make calls, becky of course, as so many others have back at headquarters in terms of figuring out what happened. there's no doubt i think we can say that he was forced out. i think that is clear. others may say oh this was something in the works. this was not in the works. >> no. >> i've talked to a of senior executives at the firm who i know well, all of whom were shocked by this, but they're also looking for answers, by the way. >> right. >> so we will get them i'm sure, in time. perhaps more quickly, but we'll see. >> highest level. >> john havens for example maybe we haven't focused quite as much, had run investment banking, coo of the firm for a

number of years now. he's got a lot of people loyal to him. >> oh, yeah. >> so you do have a lot of tumult in the ranks potentially as a result of him leaving along with pandit. he clearly could not stay once pandit was forced out and i'm going to go with forced out because there's no other way to imagine this. >> i have to agree with you. >> the question is what will follow him, what will happen throughout the organization, that being more, the new york focus part of citi as opposed to the parts that the incoming ceo runs. >> i know john from the days when he ran the morgan stanley underwriting. john havens is a guy, he brought people and people loved him. he was part of -- pandit was loved internationally. havens was the heart of the business yesterday that had great numbers. remember the investment banking was driven. we had to focus on the fact that this was the quarter where everything hit right. the net interest margin was good. the international showed great growth. the domestic was good. this company had finally hit its

stride. what a great time for pandit to begin the new regime, government behind him, we talked yesterday the government can finally put him away. >> faber, when do you start forcing somebody out if you're getting forced out, and if they only did it in the last 48 hours, would they go ahead and not do an interim ceo, just hand it to corbat or, i mean did they know this last week, on saturday or sunday? >> honestly, maybe some people knew, but i've also checked with the highest levels and this is a jaw-dropper. we could come out here and say it was all planned but -- >> clearly you would have gotten some signals, obviously not planned in terms of a real succession, the guy is 55 years old. >> it's not health with pandit, it's not that he -- >> my understanding is it's not health. >> and it had nothing to do with i can't get compensation with

the great job jim cramer is talking about i did and i still have to battle for compensation. >> joe, how do you not mention anything yesterday? is it possible we had high drama that occurred after the call yesterday? >> if that's not the case, guys, what about sitting there with the analysts on the call, sitting there with the journalists and if you know this is coming what are you doing in terms of misleading people? >> well the problem is we don't know the story. >> we've never seen anything like this. have you seen anything like this? >> not in a long time. not at a company like this. >> you know, jim -- >> and what role the government played is a key question. i'm looking at this board of directors this is not a strong board. >> jim, it's well positioned now but i still point out, faber, it's a $3 stock. it was a $50 stock. it's a $3 stock. >> yes, it is. >> this was a terrible situation. i was always surprised that it surviv survived. washington mutual went away, a lot of companies in that area. look, wachovia went away, there

was a big tussle. >> this was much bigger and interconnected. >> it couldn't fail, but i would pi point out that vikram said we'd get this to be an international bank, check, we did that. we'll get it so get it so net i margins are better and can fund much better. he did that. this was finally when i thought they had put it together. now maybe he's one of those guys that say listen i got the promised land i'll hand it over. that quarter yesterday was so strong. i really felt this was upgraded today by raymond james. i went back over the quarter last night. citi down to 9%. >> listen, the morgan stanley-smith barney transaction, we had the big writedown as a result of that. that's not fireable offense i wouldn't imagine in any way plus you've known about that for quite some time.

>> he wanted the bank to be 75% international. he envisioned the bank one day that it would have its annual meeting in mexico city or singapore. it wouldn't be constrained by the four walls of america. >> the guy we need to hear from is the chairman. >> everyone has an opinion. >> hey guys, everybody has an opinion but pandit emergency guy to come in. is there some hard feelings about the smith barney deal and the way it was done. >> i don't think so. >> i don't know, joe. i don't think that would be -- >> department to leave at year end? did pandit want out at year end because he's not getting paid. >> in my back brown conversations with the bank that was not my impression that he wanted to leave at year end. >> no. he really liked the fact that the bank had finally gotten away from the government.

>> look he took a lot of heat from the shareholders and said i don't care. that was the time. if you're going to step down when he braved that. look, we need more information. i don't want to cuff this thing. this is an odd one. corbat is in hand. this was a great quarter yesterday. >> is the chairman new, mike o'neal? >> yeah. remember you had parsons. >> right. how do they get along? >> i don't know. i have no sense. >> maybe they don't get along. >> we're speculating. look only thing worse than bad news is bad news late and only thing worse than that is bad news late and a surprise. we're speculating the chairman of the board needs to step up provide more information and provide it asap. >> it's gone from the website already. overhauled all of this. >> easy come, easy go. >> when we come back we'll have

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from the ceo position and the board. this hit less than an hour ago and comes a day after the company reported impressing earnings. the president and ceo john hey convenience is stepping down. michael corbat is the ceo of europe, is stepping in as ceo. stock is down by 3%. >> we tackled a lot of topics with our guest host. up next we will give him the last word. ♪ [ male announcer ] how do you make 70,000 trades a second... ♪ reach one customer at a time? ♪ or help doctors turn billions of bytes

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welcome back, evody. andrew calling in on the news line with some details at the change at citigroup. andrew, good morning. >> good morning. couple quick things. one i just learned treasury staffers were also surprised by this. you would have thought there would have been advanced notice to treasury. not clear whether tim geithner of given notice. much of the staff worried about his departure and are watching cnbc sponsorship it says -- >> what was treasury's reaction or the staffers. >> for the most part surprise. one other thing worth noting, the relationship between pandit and the board was actually more conten